APSE s Concerns Over Proposed Section 511 Language and Suggested Alternatives

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1 APSE s Concerns Over Proposed Section 511 Language and Suggested Alternatives APSE would like to applaud Senator Harkin and the Senate HELP Committee for its efforts to increase the workforce participation of people with disabilities in the proposed reauthorization of the Rehabilitation Act (Title V of the Workforce Investment Act). Throughout the act, there is language that significantly strengthens the ability of people with disabilities to get the necessary supports and assistance that will allow them to fully participate in the nation s workforce and escape lives characterized by chronic poverty and isolation. APSE would also to praise efforts within the proposed reauthorization to address issues related to sub-minimum wage. As discussed in APSE s position paper calling for the phase-out of sub-minimum wage, there have been chronic and ongoing issues in the oversight and administration of sub-minimum wage, with the incident involving Henry s Turkey Service in Iowa as the most obvious example. APSE has clearly and emphatically stated its position on sub-minimum wage and the need to phase it out. At the same time, APSE is cognizant of the political realities and range of views on this issue, and would like to support any type of forward progress that will result in decreased reliance on subminimum wage. Section 511, as written, does not meet this standard. APSE has serious concerns that the well-intended attempt to restrict the use of sub-minimum wage in Section 511 of the Rehabilitation Act, will in fact not only have the opposite effect of increasing the use of sub-minimum wage, but also create a significant administrative burden on the public Vocational Rehabilitation system. Suggested Changes in Section 511 While APSE has been clear that it would like to see Section 511 eliminated, if Section 511 is to remain in the Rehabilitation Act (Title V of WIA), then APSE is requesting the following changes. APSE has attached suggested language that incorporates these suggested changes. That prior to a determination that an individual be paid sub-minimum wage, an individual receive a minimum of two years of supported employment services to ensure that the individual has had maximum opportunity to gain employment in the community. That a neutral 3 rd party mechanism be developed which would encompass the following: o Initial determination that payment of sub-minimum wage is appropriate and that all other integrated community employment alternatives have been exhausted o The full participation of the individual with a disability in the initial determination of payment of sub-minimum wage, at which the individual has the right to have an advocate with them of their choosing o The provision by the individual (and their parent/guardian, if appropriate) of explicit permission in writing for payment of sub-minimum wage o Ensuring clear understanding by the individual (and their parent/guardian, if appropriate) of the individual s rights under sub-minimum wage, including: a) the right to appeal to USDOL a decision to pay sub-minimum wage; b) the requirement that productivity be reviewed every 6 months; c) that payment of sub-minimum wage is specific to the work being performed, d) that a blanket assumption of sub-minimum wage for all types of work is not permitted, and e) that there may be other types of work or other employment settings where the individual is entitled to the minimum wage. (All of these are provision of current 14(c) regulations). 1

2 o A full review of the initial determination of payment of sub-minimum wage at 6 months, and annually thereafter, which would include the full participation of the individual with a disability, and an advocate of their choosing. That the reference to work readiness or job training services be removed, as APSE feels this an effort to obtain ongoing public Vocational Rehabilitation funding for sheltered workshop services, which is at odds with the goals of the Rehabilitation Act. Alternative Approaches In APSE s view, the appropriate legislative vehicle for addressing sub-minimum wage would be the Fair Labor Standards Act (FLSA), under which payment of sub-minimum wage is permitted. However, APSE recognizes the concerns over the political challenges and realities of any attempt to modify the FLSA, and so clearly alternatives need to be considered including the Individuals with Disabilities Education Act (IDEA), the Rehabilitation Act, etc. Congress may also wish to consider directives and appropriations to oversight/regulatory agencies that would address issues pertaining to sub-minimum wages. APSE would be supportive of legislative and policy actions regarding sub-minimum that contain any of the following elements: Placing a time limit on the use of sub-minimum wage on an individual basis Ending the placement in a job at sub-minimum wage as an acceptable outcome for transition services under IDEA Eliminating the use of sub-minimum wage by new entrants into the adult service system Ending the issuance of new special wage certificates for organizations Creating an end date by which sub-minimum wage would be discontinued. Prohibiting the use of sheltered employment settings as part of transition services prior to age 22. In addition to the above elements, APSE would also be supportive of any legislative or policy actions that ensures proper monitoring of use of sub-minimum wage, and that the rights of individuals with disabilities are fully respected. Sufficient resources for proper oversight and monitoring of use of subminimum wage by the Wage and Hour Division of USDOL, or creation of an alternative entity to do so (possibly including delegating part of this responsibility to individual states) should also be considered. Rationale for APSE s Opposition to Section 511 as Written Specific concerns with Section 511 as written are as follows: In 2001, successful closure of public Vocational Rehabilitation cases into sheltered workshops was no longer permitted. Explicit statement within Section 511 that individuals served by Vocational Rehabilitation can earn sub-minimum wage, From APSE s perspective, this is a step backwards by implying that it is acceptable for individuals to earn sub-minimum wages in sheltered workshops (the vast majority of sub-minimum wages are paid in sheltered workshops and with few exceptions, wages are paid by a disability service provider). If, through multiple work experiences, it is agreed that competitive employment is not currently possible, Vocational Rehabilitation does not need to support subminimum wage employment as an alternative. 2

3 There have been ongoing concerns with the performance of the public Vocational Rehabilitation system. By expanding the role of public VR in the use of sub-minimum wage, this can do nothing but add to those concerns, rather than focusing on employment outcomes. The various clauses and conditions of Sections 511 seem quite complex, and will take significant time and resources to administer and enforce Such time and resources could be much better spent on assisting individuals with disabilities to find employment in the community, rather than administering a complex set of rules and regulations for people to earn less than minimum wage. While the proposed language contains protections for individuals in terms of their rights, these protections are both complex and resource intensive in terms of implementation, while at the same time lacking specific elements that could strengthen them. GAO and others have found that the oversight of section 14 (c) has been extremely lacking, and APSE has major concerns that these protections will suffer a similar fate and in many ways not serve as a true opportunity to appeal or refuse to be placed in a position paying sub-minimum wage. While the approach of Section 511 appears to be one of attempting to create a process for substantial procedures and documentation of why a young person should be paid sub-minimum wage to ensure that it is used on an extremely limited basis, APSE s concern is that in actual implementation this approach will have the opposite effect to provide a mechanism for documentation that allows expanded use of sub-minimum wage. Much of Section 511 speaks of individuals receiving sub-minimum wage in pre-employment and job training services. However, the reality of such services in sheltered workshops and similar facility-based services, is that the piece rate work that is typically performed does little if anything to truly prepare individuals for the demands of today s economy, and research has indicated that once individuals enter a sheltered workshop and similar setting, they rarely leave for employment in the community. While APSE is a mission-driven advocacy organization with a strong commitment to community employment, it needs to be recognized that these concerns are also being expressed by individuals with long-term experience as public Vocational Rehabilitation professionals. The end of this document contains excerpts from a letter by Rick Hall, a long-term VR staff member from Wisconsin, that are reflective of those concerns. Background: APSE s Position On Sub-Minimum Wage APSE has clearly stated that its view that sub-minimum wage is unnecessary to promote employment opportunities for people with disabilities. As detailed in its 2009 policy statement on sub-minimum wage: Bad job matches are the real issue: For every individual, there are jobs and tasks we are good at and those we are ill-suited for. People with disabilities are no different. The work that individuals are required to perform at sub-minimum wage is nothing more than simply a bad match for their skills, abilities, and interests - and in fact the sub-minimum regulations reinforce this. Per DOL, in order for an individual with a disability to be paid sub-minimum wage, the individual s disability must impair their capacity to earn wages or productivity for the specific work being performed (not every job). Furthermore, a blanket assumption of sub-minimum wage for all types of work is not permitted, and the regulations specifically note that there may be other types of work or other employment settings where the individual is entitled to the minimum wage. 3

4 Productivity rate is not a fair basis for wages: Sub-minimum wage is based on the concept that production rate is the sole or primary criteria on which a business bases compensation and values a worker. This is a simplistic notion, not at all based on the realities of operating a business and managing employees, particularly in the 21 st century economy. Individuals are valued as employees for a wide range of abilities, gifts and talents: their customer service skills, their ability to get along with co-workers, their reliability, the quality of work, etc. The argument that the value of an employee should be solely based on a production rate is an outdated concept. The productivity standard is discriminatory towards people with disabilities: People with disabilities are among the few groups whose pay is based strictly on a productivity rate. It is discriminatory that individuals with disabilities are subjected to such a standard, while most workers are not. Sub-minimum wage is at odds with national disability policy: The existence and use of subminimum wage is a reflection of viewing people with significant disabilities as incapable of being fully integrated into the general labor force, a view that is at odds with the national disability policies that have developed over the past 40 years. Sub-minimum wage is being used to support a more costly service delivery model: Research indicates that over time, supported employment is cost efficient - for every $1 of costs taxpayers and workers invest into supported employment, more than $1 is returned in the form of monetary benefits. A study of all 231,000 individual supported employment cases closed by public Vocational Rehabilitation between 2002 and 2007 found that the average supported employee generated a net monthly benefit to taxpayers of $251 per individual, and a benefit-cost ration of 1.46.Further, supported employees were cost-efficient regardless of their primary disability or presence of secondary conditions. Additionally, studies indicate that supported employment is significantly less expensive than sheltered workshops. The full statement is available at: Excerpt from letter of Rick Hall, State of Wisconsin: Prior to my retirement in 2008, I worked for Wisconsin DVR, including 27 years as a staff member in the VR central office. I studied the Rehabilitation Act and regulations many times over the years in working on the VR and Supported Employment state plans and in managing special projects. Over that period I was struck with the undue complexity of the legislation we struggled mightily to simplify and clarify legislative intent to our staff, consumers and the public. I am writing to tell you that section 511 of the (6/15/11) recent draft discussion piece on subminimum wage and transition issues is ill-advised for a variety of reasons. First, it presents a complex series of criteria for VR staff to follow in determining whether a VR consumer should enter subminimum wage employment. Let s make it simple VR should have nothing to do with subminimum wage employment. Since 2001 (since 2000 in Wisconsin Policy) the VR regulations prohibit counting sheltered employment as an employment outcome. Second, if, through multiple work experiences, VR and all the consumer s team agree that competitive employment is not currently possible, VR does not need to support subminimum wage employment as 4

5 an alternative. In my work with CRP s throughout Wisconsin, we have found repeatedly that individuals working in subminimum wage jobs often can work at or above minimum wage. Their internal capacity didn t change; their environment changed to where they could be productive. If we cannot assist the individual to obtain a productive job match then it is our failure (a status 28 closure in VR jargon). This still doesn t require consideration of subminimum wage employment. If Medicaid wants to fund that under the old-fashioned readiness concept they call Prevocational Services, so be it. Third, if you want to support transitioning high school students getting the best shot at integrated employment through VR, then just say so. Under IDEA, no student should engage in non-integrated, subminimum wage employment prior to a full set of coordinated transition services including the efforts of the student, their parents, the school, VR and appropriate service providers. The same language could be your section 511 in the Rehab Act. What s so hard about that? Rick Hall Discover Innovations 2793 Willow Ct McFarland WI Home: (608) Cell: (608) rth1948@charter.net < 5